NOTE 14 — SUBSEQUENT EVENTS

XOMA Milestone Payment

Pursuant to the XOMA License agreement discussed in Note 6, after the fiscal quarter ended March 31, 2024, we paid a $5.0 million which was incurred upon the dosing of the first patient in a Phase 3 clinical study for RZ358. The Company will recognize the related licensing expense for the fiscal quarter ending June 30, 2024.

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Exchange Warrant Amendment

On May 13, 2024, the Company entered into an amendment to the Exchange PFWs discussed in Note 7. This amendment was to further clarify equity classification so that the Company is not required to obtain shareholder approval if the exercise of the Exchange PFWs would result in aggregate beneficial ownership by the holders in excess of 19.99%. The holders of the Exchange PFWs agreed to the amendment since their warrants were only exercisable for 7% of the Company’s outstanding shares and they were already prohibited from exercising the Exchange PFWs to obtain beneficial ownership in excess of 19.99%. As a result of the amendment, the Exchange PFWs will no longer be accounted for as a derivative liability beginning on May 13, 2024. The fair value of this derivative liability increased by $0.9 million between April 1, 2024 and May 13, 2024 whereby the Company will recognize an additional non-operating loss of $0.9 million for the fiscal quarter ending June 30, 2024. The fair value of this warrant derivative liability amounted to $8.6 million as of May 13, 2024 whereby this amount will be reclassified from long-term liabilities to additional paid-in capital for the fiscal quarter ending June 30, 2024.